I’m predicting a 45-50% drop too but I can’t say how exactly it will play out, whether it will happen in 3yrs or 10yrs, that is the tricky part. My personal feeling is that the exotic/subprime reset in 2007 and 2008 will depress prices in one huge go and revert them back to 2002 levels. 2008 4Q we should see at least a 30% drop since I don’t see any sufficient demand with the absence of speculation or exotic lending.
Interest rates are going up, the fed is already concerned that CPI is trending in the wrong direction (i.e. up!!), I suspect that late 2007 they may have to jack up rates again, this is additional fuel to the fire for all the resetting ARMs.
I feel we cannot use history as a guage because we have had a rise in values that has never occured on this scale in history. I predict the downfall is also going to be one of a kind.
We may also enter a deflationary spiral aka Japan, why not?
